US private equity firm Carlyle eyes Mena deals

INTERVIEW, March 26, 2014

By Mirna Sleiman

The Middle Eastern investments of US private equity firm Carlyle have benefited from a rise in government spending since the Arab Spring uprisings, a top official said, adding the company would also start looking at deals in North Africa.

Carlyle, with $189 billion of assets under management across the world, opened Middle East offices in 2007 and has since bought stakes in six firms, mainly in Turkey and Saudi Arabia.

Firas Nasir, managing director and co-head of Carlyle Mena, said the companies were not in countries directly affected by the political turmoil of the Arab Spring, and in some cases had prospered as governments in the region raised spending on social and infrastructure projects.

"Our portfolio companies actually benefited as many of the oil exporting nations accelerated their spending and investment programmes which injected liquidity into the system," he told Reuters in an interview.

Saudi Arabia, for example, increased spending in its 2014 state budget plan by 4.3 percent to 855 billion riyals ($228 billion), while in the United Arab Emirates a federal budget of 46 billion dirhams ($12.5 billion) was approved for 2014, half of which will go on development and social projects.

While looking for more deals in the Gulf region and Turkey, Nasir said Carlyle was closely monitoring North Africa and the political developments there, as it was attracted by the demographics of a young and fast-growing population in countries such as Egypt, Algeria, Morocco and Libya.

"Once we are comfortable deploying our investors capital within some of these nations, we expect to be very active," he said.

"These defensive industries align well with and benefit from the demographics of the Middle East and Turkey - young and fast growing populations with increasing disposable income and an expanding middle class," he said.

NO EXITS PLANNED

Nasir said Carlyle, whose investments in Mena are only a tiny proportion of its global total, would focus this year on developing and growing its companies in the region and it didn't expect to sell out of any more of them in the coming 18 months.

"We've announced two exits so far from our Mena fund. The other four portfolio companies are younger. We need to spend a couple of years expanding and enhancing these businesses before we're ready to exit," he said.

Carlyle this month sold its 30 percent stake in General Lighting Company (GLC) to Philips. Last year, it exited Medical Park, Turkey's second-largest healthcare group.

These investments were made through Carlyle Mena Partners, a $500 million fund established in March 2009.

Previous investments by the fund include Alamar Foods, operator of Domino's Pizza and Wendy's restaurants throughout the Mena region and a 48 percent stake in Turkish private education provider Bahcesehir Koleji.

"We don't see ourselves exiting any of these companies within the coming 18 months. This year, our focus is on working on our existing portfolio and pursuing new investment opportunities," Nasir said. – Reuters